FRANKFURT, Germany - European stocks fell Monday amid ongoing jitters over the Chinese economy following weak manufacturing data. Japanese stocks, however, extended gains following the Bank of Japan's decision last week to introduce a negative interest rate policy to boost lending and spur growth.
Europe got off to a weak start with Britain's FTSE 100 down 0.4 percent to 6,059.68. France's CAC 40 lost 0.6 percent to 4,392.95 and Germany's DAX fell 0.5 percent to 9,746.29. Futures augured a lackluster start for Wall Street: Both Dow and broader S&P 500 futures fell 0.6 percent.
An index based on a survey of factory purchasing managers fell to 49.4 in January, its lowest in more than three years, in the latest sign of weakness for the world's No. 2 economy. January's reading was down from December's 49.7; numbers below 50 indicate contraction.
"There are precious few indicators that point to a recovery within China and this continues to spell bad news for the global economy which has been hugely reliant upon Chinese demand to help compensate for weak western demand post-2007," said Joshua Mahony, market analyst at IG.
The U.S. economy will also be in focus this week. A busy calendar kicks off later with the monthly manufacturing report from the Institute for Supply Management. The week ends Friday with the January nonfarm payrolls report, which could go a long way to determining whether the U.S. Federal Reserve will raise interest rates again in March.
Japan has also been in focus after the country's central bank introduced a negative interest rate policy on Friday. Analysts say that move may impact on other central banks around the world by making them to current stimulus measures or be more cautious about tightening policy.
"The Bank of Japan's move sets a more dovish tone for major central banks around the world," said Ric Spooner, chief analyst at CMC Markets in Sydney. At the margin, he said it will increase the incentive for the European Central Bank to do more at its March meeting as it seeks to keep currency relatively weak. And the Fed and the Bank England may "be a little more cautious about lifting rates," Spooner said.
Japan's Nikkei 225 rose 2 percent to 17,865.23 and South Korea's Kospi added 0.7 percent to 1,924.82. Hong Kong's Hang Seng fell 0.5 percent to 19,595.50 and the Shanghai Composite in mainland China lost 1.8 percent to 2,688.85. Australia's S&P/ASX 200 gained 0.8 percent to 5,043.60.
Benchmark U.S. oil was down 41 cents to $33.21 a barrel in electronic trading on the New York Mercantile Exchange. It finished Friday at $33.62 a barrel, up 40 cents, or 1.2 percent. Brent crude, a benchmark for international oils, fell 6 cents to $35.93 a barrel in London.
The dollar rose to 121.31 yen from 121.12 yen on Friday. The euro strengthened to $1.0867 from $1.0831.